CHAPTER 8-4: Privacy — 1025 Publ 5683 (PDF)

Disclosure and Use of Tax Information – IRC 7216 Requirements

Regulations under Internal Revenue Code Section (IRC) 7216, Disclosure or Use of Tax Information by Preparers of Returns, became effective January 1, 2009. These updated regulations had been unchanged since the 1970s and gave taxpayers greater control over their personal tax return information. The regulations became final on December 28, 2012.

The statute limits tax return preparers’ use, and disclosure of information obtained during the return preparation process to activities related to the preparation of the return. The regulations describe how preparers, with the informed written consent of taxpayers, may use or disclose return information for other purposes. The regulations also describe specific and limited exceptions that allow a preparer to use or disclose return information without the consent of taxpayers.

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See the TaxSlayer User Guide and Chapter 10-3, TaxSlayer, for information on IRC 7216 consents available using TaxSlayer.

Additional References

Publication 4299, Privacy, Confidentiality, and Civil Rights - A Public Trust
Section 7216 Frequently Asked Questions
Publication 5471, Fact Sheet: Disclosure and Use of Tax Information – Internal Revenue Code (IRC) 7216 Requirements for VITA/TCE Partners

Protecting taxpayer information is critical to keeping the strong integrity and success of the VITA/TCE program. Absent an applicable regulatory exception, Treasury Regulation section 301.7216-3 strengthens taxpayers’ abilities to control their tax return information. In general, the regulation requires tax return preparers (including volunteer preparers, who intend to use or disclose a taxpayer’s tax return information for a purpose other than current, prior, and subsequent return preparation) to obtain taxpayer consent and provide taxpayers with specific information, including who will receive their tax return information and the items of tax return information disclosed or used.

Treasury Regulation Section 301.7216-3 provides limited circumstances when, without first obtaining consent from the taxpayer, a tax return preparer may disclose or use a taxpayer’s tax return information other than to prepare a tax return. Some of the most common circumstances in the VITA/TCE program include:

Compiling and using a list to solicit tax return preparation business
Performing legal or ethical conflict reviews
Disclosing or using certain, limited statistical compilations

Under the regulations, disclosure of a statistical compilation must be anonymous as to taxpayer identities, meaning the compilation:

Does not include any personally identifiable information (PII), such as the taxpayer’s name, SSN/ITIN, address, or other personal information
Does not disclose cells containing data from fewer than ten tax returns

Exception: The regulations continue to require consent to use, or disclose, tax return information in marketing or advertising of statistical compilations containing or reflecting dollar amounts of refund, credit, or rebate, or relating to percentages.

Using and Disclosing Taxpayer Information:	Requires a Consent to Use?	Requires a Consent to Disclose?	Requires a signed paper consent(s) if volunteers are entering the PIN?
Preparing current, prior, or subsequent year returns	No	No	No
Purposes other than preparing prior, current, or subsequent year returns	Yes	Yes	Yes
Reporting the number of returns (for example the number of types of returns such as Earned Income Tax Credit or Child Tax Credit) prepared, for fundraising, marketing, publicity, or other uses related to the volunteer site tax return preparation business.	No	No	No

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Using and Disclosing Taxpayer Information:	Requires a Consent to Use?	Requires a Consent to Disclose?	Requires a signed paper consent(s) if volunteers are entering the PIN?
Reporting any data containing return dollar amounts for marketing or advertising or any other non-fundraising activities	Yes	Yes	Yes
Reporting any data containing return dollar amounts for fundraising activities	No	No	No
Global Carry Forward Consents	No	Yes	Yes
Relational EFIN Consents	No	Yes	Yes

Tax return preparers must obtain consent from the taxpayer before using or disclosing tax return information. Sites must provide return preparation services regardless of the taxpayer’s decision. However, the services provided may be limited to tax return preparation and tax return preparers must not use or disclose their data. Each partner/volunteer organization must evaluate the uses of taxpayer information against IRC 7216 requirements to ensure adherence.

Relational Electronic Filing Identification Numbers (EFIN)

Electronic filing sites, using relational EFINs with their tax preparation software, must solicit consent to “Disclose.” The relational EFIN process requires the tax preparation software provider share return data with a third party, the primary sponsor. This sponsor must comply with IRC 7216 regulations. Since taxpayer data sharing occurs when electronically filing, taxpayers must consent to disclose their data. If the taxpayer does not grant consent, or the taxpayer does not enter a PIN and date at a VITA or non-Tax-Aide TCE site, the partner cannot e-file the return. This is because the relational EFIN process shares the data with the preparing site and the primary sponsor during acknowledgement. The only way to prevent data sharing is to stop the e-file.

Mandatory Consents to Disclose or Use Taxpayer Information

Revenue Procedure 2013-14: Mandatory Consent Language

provides the mandatory language required in a consent to disclose or a consent to use tax return information with respect to a Form 1040-series income tax return. A taxpayer need not sign consent to engage a tax return preparer to perform tax return preparation services if the preparer and taxpayer do not plan for the preparer to disclose or use the taxpayer’s tax return information for any purpose other than preparing a return.

Mandatory Consents Statements

Partners must include the following statements in consent. However, the tax return preparer may substitute the preparer’s name where the consent uses “we” or “our.”

Consent to “Disclose” (such as, financial aid, establishment of a bank account, other government agency assistance, or bank products)

All consent to disclose tax return information must contain the following statements in the following sequence:

Federal law requires this consent form be provided to you. Unless authorized by law, we cannot disclose your tax return information to third parties for purposes other than the preparation and filing of your tax return without your consent. If you consent to the disclosure of your tax return information, federal law may not protect your tax return information from further use or distribution.

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You do not have to complete this form to engage our tax return preparation services. If we obtain your signature on this form by conditioning our tax return preparation services on your consent, your consent will not be valid. If you agree to the disclosure of your tax return information, your consent is valid for time that you specify. If you do not specify the duration of your consent, your consent is valid for one year from the date of signature.
If you believe your tax return information has been disclosed or used improperly in a manner unauthorized by law or without your permission, you may contact the Treasury Inspector General for Tax Administration (TIGTA) by telephone at 1-800-366-4484, or by email at complaints@tigta.treas.gov .

Consent to “Use” (such as, financial aid, establishment of a bank account, other government agency assistance, or bank products)

All consents to use tax return information must contain the following statements in the following sequence:

Federal law requires this consent form be provided to you. Unless authorized by law, we cannot use your tax return information for purposes other than the preparation and filing of your tax return without your consent.
You do not have to complete this form to engage our tax return preparation services. If we obtain your signature on this form by conditioning our tax return preparation services on your consent, your consent will not be valid. Your consent is valid for time that you specify. If you do not specify the duration of your consent, your consent is valid for one year from the date of signature.

If you believe your tax return information has been disclosed or used improperly in a manner unauthorized by law or without your permission, you may contact the Treasury Inspector General for Tax Administration (TIGTA) by telephone at 1-800-366-4484, or by email at complaints@tigta.treas.gov .

Multiple Disclosures or Uses Within a Single Consent Form

Treasury Regulations section 301.7216-3(c)(1) provides that a taxpayer may consent to multiple uses within the same written document or multiple disclosures within the same written document. Multiple disclosure consents and multiple use consents must provide the taxpayer with the opportunity, within the separate written document, to affirmatively select (accept/reject) each separate disclosure or use. Partners must provide:

Disclosure consents and use consents in separate documents.
Taxpayer with the mandatory consent language for each separate disclosure or use.

The mandatory statements need only be stated once in a multiple disclosure or multiple use consent.

Disclosure of Entire Return

If consent authorizes the disclosure of a copy of the taxpayer’s entire tax return or all information contained within a return, the consent must provide that the taxpayer could request a more limited disclosure of tax return information as the taxpayer may direct.

Electronic Signature Requirements

Revenue Procedure 2013-14 provides specific requirements applicable to a taxpayer’s electronic signature to consent, to disclose or use the taxpayer’s tax return information. The taxpayer must sign by an affirmative (physical) action all consents to disclose or use tax return information. A verbal consent is not an affirmative action and therefore not acceptable as a valid consent. Additional comments include:

For electronic consents, a tax return preparer must obtain a taxpayer’s signature on the consent by one of the following methods.

Consult your software provider to determine which method(s) is/are available in your tax preparation software. Not all software providers support all methods.

Preparers may assign a personal identification number (PIN) that is at least 5 characters long to the taxpayer. To authorize the consent, the taxpayer may type in the pre-assigned PIN as the taxpayer’s signature authorizing the disclosure or use. The taxpayer must affirmatively (physically)

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enter the PIN for the electronic signature to be valid,

Have the taxpayer type in the taxpayer’s name and then hit “enter” to authorize the consent. The taxpayer must affirmatively (physically) type the taxpayer’s name for the electronic consent to be valid, or
Any other way the taxpayer affirmatively (physically) enters 5 or more characters unique to the taxpayer that the tax return preparer uses to verify the taxpayer’s identity. For example, entry of a response to a question regarding a shared secret (such as mother’s maiden name, favorite color, a significant date, etc.) could be the type of information by which the taxpayer authorizes disclosure or use of tax return information.

If the preparer is entering the consent PIN and date into the tax preparation software, the taxpayer must sign and date a paper consent form before the preparer enters the consent PIN and date into the tax preparation software. The site may give the signed paper consent form to the taxpayer or maintain at the site. Whether you give the taxpayer a signed copy or maintain it at the site, you must provide the taxpayer a copy of the consent form from the tax preparation software with the PIN for their records.

See the TaxSlayer User Guide for information on IRC 7216 consents available using TaxSlayer.

Civil Rights Site Requirements

In accordance with federal law and the Department of the Treasury – IRS policy, discrimination against taxpayers based on race, color, national origin (including limited English proficiency), disability, sex (in education programs or activities), age or reprisal is prohibited in programs and activities receiving federal financial assistance.

Taxpayers with a disability may request a reasonable accommodation and taxpayers with limited English proficiency (LEP) may request language assistance to access service.

Taxpayers must not incur any cost for reasonable accommodations and language access.

To help limited English proficient (LEP) taxpayers comply with their federal tax obligations and prepare their tax returns accurately, SPEC offers over-the-phone interpreter (OPI) services at every VITA/TCE return preparation site. OPI offers real-time interpretation services for over 350 languages. The OPI service is free to all VITA/TCE sites. For more information on the OPI service see Publication 5547, Job Aid: SPEC Over-thePhone Interpreter (OPI) Service for SPEC Partners, Site Coordinators and Employees.

Additional References

Protecting Taxpayer Civil Rights
Site Coordinator Corner, Fact Sheets and Civil Rights Unit Advisories

Posting Civil Rights and D-143 (Tax-Aide Sites)

All VITA/TCE sites are required to make available to all taxpayers who seek services at the site the current Publication 4053 (en-sp) Your Civil Rights are Protected Poster for IRS Assisted Programs (VITA/TCE/LITC) (English & Spanish), or a current D143, AARP Foundation Tax-Aide (poster). These posters provide volunteers and taxpayers with contact information to report discriminatory treatment. If a taxpayer or volunteer has a civil rights complaint, refer them to the contact information on Publication 4053 (en-sp). If taxpayers request the information in writing, provide Publication 4454, Your Civil Rights Are Protected. Publication 4454, is an optional brochure designed to notify taxpayers of their civil rights when the site cannot provide tax preparation services (for example, lack of information to prepare the return, the return is not within scope of the VITA/TCE program).

It is not acceptable to use Publication 730 (EN-SP) or the Tax-Aide envelope as the source for notifying the taxpayers of their civil rights. This product offers information to the taxpayer who receives service, not the

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taxpayer who is denied service. Publication 4454 and Publication 4053 (en-sp), are available to provide taxpayers who do not receive the Publication 730 or the Tax-Aide envelope.

Tax-Aide may secure D-143 from their state coordinator. If a Tax-Aide site does not have a current D-143 displayed during a site review, the reviewer will provide them with a copy of Publication 4053 (en-sp) to use in the interim.

Violation of Civil Rights

Non-compliance with civil rights can be very costly, involve lengthy court proceedings, and include:

Referral to the Civil Rights Unit for further investigation
Private lawsuits
Termination of current federal assistance
Denial of additional federal assistance
Termination from the VITA/TCE program

Providing Reasonable Accommodations

Taxpayers with a disability may require a reasonable accommodation to participate or receive benefits from a program or activity supported by the IRS. An accommodation is any change made to a practice, policy, or procedure that allows persons with disabilities equal access to programs and activities.

When a taxpayer requests an accommodation, the site must determine the accommodation needed, whether it is reasonable, and if available. If a site’s representative must deny a request for a specific accommodation because it is not reasonable, discuss with the taxpayer alternative accommodations that would remove the barrier to service.

Disabilities are not always visible.

Coordinator Fact Sheets/Civil Rights Unit (CRU) Advisories covering reasonable accommodations can be found on the Site Coordinator Corner or by contacting your local SPEC territory office. Also, see Chapter 9: Serving Taxpayers with Disabilities, for more information.

Providing Language Assistance

Taxpayers with limited English proficiency (LEP) may require language assistance to participate in, or receive the benefits from, a program or activity supported by the IRS. Language assistance may include both oral (interpretation) and written (translation) services.

Sites must take reasonable steps to ensure meaningful access to their programs and activities by persons with LEP. In determining what constitutes reasonable steps, sites should conduct an individualized assessment that balances the following four factors:

The number or proportion of LEP persons eligible for service or likely to be encountered
The frequency with which persons with LEP come into the program
The nature and importance of the service provided by the program to people’s lives
The available resources

Using Demographic Data to Prepare for Reasonable Accommodation and Language Assistance Requests

Prior to each filing season, partners should assess the demographic makeup of their service areas, so their sites are prepared to respond to requests for accommodation and language assistance.

There are several sources for demographic data regarding the LEP population. A federal interagency LEP website is a primary resource for demographic information with information found under demographic data

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on the website. In addition, the U.S. Census Bureau compiles American Community Survey (ACS) data you can tailor to a geographic area.

Civil Rights Assurance Process

VITA/TCE Partners

All partners agree to comply with civil rights laws by annually signing Form 13533, VITA/TCE Partner Sponsor Agreement. There is only one form and one signature needed for each partner certifying to uphold taxpayers’ civil rights, maintain program integrity, and protect information provided by the taxpayers serviced through the VITA/TCE program. SPEC will continue to secure and maintain Form 13533 from all partners. Grant Partners

Grant recipients accept the civil rights assurances and certification by checking “I Agree” in Block 21 on the SF 424, Application for Federal Assistance. These assurances and certifications are also applicable to any organization that sub-awards grant funds and grantees must include in their contracts or memorandums of understanding when sub-awards are involved. Refer to Publication 1101, Application Package and Guidelines for Managing a TCE Program, and Exhibit 2 in Publication 4671, Helping You Help Others VITA Grant Program Overview and Application Instructions, for the “List of Assurances and Certifications.”

Grant recipients must retain all financial records, supporting documents, statistical records, and all other records pertinent to an award for a period of three years from the final submission date for the grant cycle. Additional guidance is available in Publication 4883, Grant Programs Resource Guide for VITA Volunteer Income Tax Assistance & TCE Tax Counseling for the Elderly, or by contacting the IRS VITA Grant Office at Grant.Program.Office@irs.gov for more information.